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28 Aug 2019
Movement for change
Suggestion View - 317
Make CPF contribution voluntary for older workers

Someone was very angry at the proposed increase in contribution rate for older workers. He said that most of these workers do not earn enough. Why force them to save more for their future, when they need the money for their current expenses.

He also argued that the increase from employers will also affect the older workers. Some employers may replace them with younger workers or foreign workers to save cost. Alternatively, the employer may reduce the salary of the older worker to offset their higher expense.

What is the solution?

I prefer that CPF contribution for older workers be voluntary after age 55. The contribution should only be compulsory for workers up to age 55. This will be good for workers and for employers. 

The financial planning should be based on the attempt to accumulate sufficient savings on reaching age 55. This will require the worker to be more prudent in using CPF for purchase of property. Actually, this has already been implemented for man years, as a significant portion of the CPF savings goes into the special account that has to be kept for retirement.

Many workers have insufficient savings for retirement as they were unemployed or did not have sufficient or steady income for a stretch of years. 

It is not a good solution to force them to save at a higher rate beyond 55. It is better to make the savings voluntary.

Minister Teo, I hope you are listening. 

Tan Kin Lian

Vote - should CPF contribution beyond age 55 be voluntary?


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